In general, equipment maintenance and repair services are integral parts of a typical service contract. Almost all outsourcing and/or service contracts include repair and maintenance services in addition to a standard warranty. Repair and maintenance services constitute a substantial part of the cost of a service contract. Typical repair and maintenance services include scheduled maintenance and unplanned repair services. The more frequent the planned and/or unplanned repair and maintenance services are, the higher the costs incurred by the maintenance provider resulting in a reduced service contract profit margin. Therefore, a solution or method to reduce scheduled or unplanned warranty repair and services of a service contract will add to the profitability of the service contract resulting in an overall profit increase for the company as a whole.
Traditionally, in addition to standard warranty service, a percentage of a service contract's value, or a fixed amount, is added to the service contract to cover maintenance and repair services. This additional cost is relatively uniform among all customers. Such a pricing model (for maintenance and repair outside the warranty period) does not accurately correlate with the actual cost of providing the maintenance and repair service. Customers with high maintenance and repair needs are charged at the same rate as customers with low maintenance and repair requirements. Such inflexibility in pricing is due to a lack of an accurate individual customer-based maintenance and repair-need prediction. This results in inefficient pricing and potentially lost profits (e.g., from undercharging) and reduced customer satisfaction (e.g., overcharging). It becomes essential to have a tool to predict maintenance and repair requirements based on customer's historical and actual operating conditions, and to provide a flexible and efficient pricing model for maintenance and repair services.
Typically, most warranty and maintenance charges are derived from the base cost of the equipment protected by the warranty and maintenance agreement. Most maintenance services are carried out on a predefined schedule, and repair services usually occur when there is a system or component failure. Currently, no adjustment is made to the cost of a warranty or service contract based on environmental factors and actual usage pattern that affect equipment failure rates.